QUESTION 5 Read the information below and answer the following questions INFORMATION The management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each of which requires an initial investment of R2 500 000. The following information is presented to you: PROJECT COS PROJECT TAN Net Profit Net Profit Year R R 1 130 000 80 000 2 130 000 180 000 3 130 000 120 000 4 130 000 220 000 5 130 000 50 000 A scrap value of R100 000 is expected for Project Tan only. The required rate of return is 15%. Depreciation is calculated using the straight-line method. 5.4 Benefit Cost Ratio of Project Cos (expressed to three decimal places). 5.5 Internal Rate of Return of Project Cos (expressed to two decimal places) USING INTERPOLATION.
QUESTION 5
Read the information below and answer the following questions
INFORMATION
The management of Mastiff Enterprises has a choice between two projects viz. Project Cos and Project Tan, each of
which requires an initial investment of R2 500 000. The following information is presented to you:
PROJECT COS PROJECT TAN
Net Profit Net Profit
Year R R
1 130 000 80 000
2 130 000 180 000
3 130 000 120 000
4 130 000 220 000
5 130 000 50 000
A scrap value of R100 000 is expected for Project Tan only. The required
5.4 Benefit Cost Ratio of Project Cos (expressed to three decimal places).
5.5
Step by step
Solved in 8 steps with 8 images
